Charts From the Week in Markets

Volatile sentiment takes another swipe at oil and emerging markets, while the “alternative” funds meant to cushion the chaos turn in a mixed record. Still, some hedge funds stand out, with an arcane bet on Treasurys or a money-back guarantee. Here, in five charts, is a look at this week’s financial-market highlights.

Volatility continued across global markets this week, with investors girding for more trouble in emerging markets. Many currencies have already taken a hit amid the anxiety over a slowdown in China and higher interest rates in the U.S. Now investor bets that Brazil and South Africa will default on their debt have hit their highest level since the financial crisis, underscoring the mounting stress. But there are some contrarians: Investors betting on India as the strongest of the weak, and even those who make a case for buying China stocks now.

Meanwhile, some investments pitched as offering stability in turbulent markets — with decent returns not tied to the fate of stocks and bonds — are providing little of either. Hedge-fund like “alternative” funds have soared in popularity in recent years but have turned in a mixed record. The popularity continues: Some 401(k) target-date funds are looking at including such investment products in hopes of steadying performance.

Just what is an investor to do in these markets? New York hedge fund Element Capital Management LLC, run by a former Yale University math whiz, has been buying tens of billions of dollars of U.S. Treasury debt at recent auctions. The buying is part of an apparent effort by the fund to use borrowed money to exploit small inefficiencies in the world’s most liquid securities market, a strategy that is delivering sizable profits, said people close to the matter.

And then there is the approach of the world’s largest stock-focused hedge fund: Performance guaranteed, or your money back. Robert Atchinson and Phillip Gross let investors in their $28 billion Adage Capital Management LP keep almost all of their trading gains—and promise refunds if the fund’s performance falters. By hedge-fund standards, the practice is nearly unheard of, and this year it may be particularly costly.